Competition and Ideological Diversity: Historical Evidence from US Newspapers

50 Pages Posted: 19 Dec 2012 Last revised: 11 Jan 2013

Matthew Gentzkow

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Jesse M. Shapiro

University of Chicago; National Bureau of Economic Research (NBER)

Michael Sinkinson

University of Pennsylvania - Business & Public Policy Department

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2012

Abstract

We use data on US newspapers from the early 20th century to study the economic incentives that shape ideological diversity in the media. We show that households prefer like-minded news, and that newspapers seek both to cater to household tastes and to differentiate from their competitors. We estimate a model of newspaper demand, entry and political affiliation choice in which newspapers compete for both readers and advertisers. We find that economic competition enhances ideological diversity, that the market undersupplies diversity, and that incorporating the two-sidedness of the news market is critical to evaluating the effect of public policy.

The appendices for this paper are available at the following URL:http://ssrn.com/abstract=2195623

Keywords: entry models, differentiation, media, two-sided markets, advertising

JEL Classification: L11, L52, L82

Suggested Citation

Gentzkow, Matthew and Shapiro, Jesse M. and Sinkinson, Michael, Competition and Ideological Diversity: Historical Evidence from US Newspapers (November 1, 2012). Chicago Booth Research Paper No. 12-63. Available at SSRN: https://ssrn.com/abstract=2191104 or http://dx.doi.org/10.2139/ssrn.2191104

Matthew Aaron Gentzkow (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jesse M. Shapiro

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-2688 (Phone)
773-834-8172 (Fax)

HOME PAGE: http://home.uchicago.edu/~jmshapir/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael Sinkinson

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

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